Unit 3: Economics Assignment #3
Task: Students will utilize the US Securities and Exchange Commissions™ Roadmap to Saving and Investing website to learn about the importance of saving and how to save and invest for retirement http://www.sec.gov/investor/pubs/roadmap.htm. Students will research the links: o Define Your Goals
o Determine Your Risk Tolerance
o Investment Products: Your Choices
After taking detailed notes, students will write a 1-2 page essay describing information from the site and why it is important to save for the future.
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The “Roadmap to Saving and Investing” by the US Securities and Exchange Commission contains the necessary information that one would need in order to make the right choices to get where they want to be during retirement. Essentially, the advice it gives has to do with achieving personal goals, whether someone wants to be incredibly wealthy with several expensive items, or if someone wants to be very frugal with their money, it comes down to what that individual wants to do with the money that they make, and how to maximize it to meet whatever they want for their future. Trying to find a pathway for achieving what you need or want is incredibly important, and this is one of the main points discussed by the U.S. Securities and Exchange Commission.
Beginning with the first section, referred to as “Define Your Goals”, it advised individuals to think of what they want to save or invest for. This first step is absolutely crucial in the process of making a financial plan, because why make a financial plan if there is no plan on how to spend the money saved or received from investing? As part of “Define Your Goals,” it lists some potential things that someone might want to either save and/or invest for. Some of these things include: receiving higher education, giving your children a better life, helping to care for family members, being comfortable during retirement, and buying a home or a car. With coming to the determination of the “why” factor in terms of saving or investing, the next important thing to consider is the “when” factor. The “when” factor concerns how long do you (the individual) want it to take to save or invest for that particular thing? Some people say that they want to purchase a home by the age of 30, and for others, it’s purchasing a car for their son before they turn 16. The important thing to note here, is what is the goal, and how long do you plan to work (as in saving or investing) until you achieve it?
The next section, “Determine Your Risk Tolerance”, is all about taking the proper precautions, in order to protect your savings or investments. An important thing to note, about this article is that it directly suggests that individuals put their savings at banks that are FDIC (Federal Deposit Insurance Corporation) insured. This way, if the bank were to be destroyed or robbed, the FDIC would be able to ensure your savings up to a certain amount (which is up to $250,000).
Along with this, there is the issue of risk in an individual’s life such as an injury or time of unemployment where savings will be vital for support. In regards to the investing side of risk, there is a greater chance of losing money put into investments in comparison to savings. With this knowledge, it poses a question; why would you invest, if there are a lot of risks involved? The answer is that savings do not help to combat inflation (which is the decrease of the value of a currency over time). Investing, while it brings risk, does also bring opportunity and there are many different options regarding the types of investments an individual can make, whether it be higher risk-oriented investments with a higher earnings potential or lower risk-oriented investments with a lower earnings potential. As part of the article, it puts an emphasis on looking into stocks, bonds, and mutual funds, which are all on different spectrums of risk and earnings potential.
In the last section of the “Roadmap to Saving and Investing”, there is “Investment Products: Your Choices”. This section goes in-depth about the different types of investments that people can make to achieve their goals. In the beginning, it informs readers that some investments, “…make money, and some don’t” and that there is a potential to earn money in an investment if a company is doing well (meaning it has a high value for its stock). A stock’s price (for a company) is determined based on the performance of the company in comparison to its competitors. By selling a stock, you can either sell it at more than what you paid for it, the same price you bought it, or less than what you bought it for. To make money from investments in stocks, you need to sell your share(s) for more than what you paid for it. In addition, some stocks pay dividends or a share of a company’s profits based on the amount an individual owns in the company (with a share/stock).
The other two types of investments that are explained are mutual funds and bonds. With stocks and bonds, it can be a bit more complicated but essentially, with a bond, it is a loan to a borrower from an investor and this borrower uses that money to run its operations where the investor receives interest (or money) on the investment. Regarding what a mutual fund is, it is a fund or place where an investment adviser or group of investment advisers manages money given to them by other investors and put this money towards buying and selling shares, and the value of the mutual fund is determined directly by how well the company’s stocks are performing that the mutual fund has invested in.
From a wide view perspective, the article titled “The Roadmap to Saving and Investing by the US Securities and Exchange Commission helps individuals and families in the U.S. determine how and what they will achieve their goals through either investing or saving. Going into depth with both options, allows others to think about the advantages and disadvantages of each, and help them to come to a consensus on which path they will take to achieve their goals.
In my opinion, I believe that saving for the future is important if not vital to all individuals and families because it allows us to be more efficient with our time and money. By allocating funds that we have that are not considered a necessity for spending, it is beneficial to save (or invest) to use that money at a later date for something more important to that individual.
Unit 2: Economics Assignment
Assignment 3 Option 1:
Students will investigate three job opportunities in the U.S. in different sectors that are of potential interest to them. They will provide a comprehensive overview of the position, including education and training requirements, starting salary, and chances for advancement. Students will then select one of the three careers and reflect on their choice in a 1-2 page reflection.
What are your 3 chosen job opportunities?
1. General Dentist
2. Real Estate Agent
3. Restaurant Owner
Research/Overview section
I. Dentist
The General Dentistry profession is among the highest-ranking job opportunities on this list with a starting salary of $130,000 but this is by far the most expensive job option. Early on in the career, the Dentist has little flexibility most likely because of student loans and other loans that are associated with starting a practice (depending on the area in which they reside). Becoming a dentist usually requires about 8 years of schooling (undergraduate and graduate degrees combined). During their time in dental school, there are several requirements such as shadowing hours, residency training, etc. In regards to chances for advancement, General Dentists have many options, and this would be typically referred to as “specialization” where they can take an additional 2 to 4 years of schooling to specialize in other parts of Dentistry such as Pediatric Dentistry, Maxillofacial Surgery, Orthodontia, Indodontia, etc.
II. Real Estate Agent
The real estate agent has the most flexibility in terms of salary with a starting salary of $23,000 but also doesn’t require a high degree. To become a Real Estate Agent, the individual must be at least 18 years old and must have obtained their Highschool Diploma or GED. For schooling, students are required to be registered for and complete 135 of required training/education in order to obtain licensure as an Agent. In regards to chances for advancement, the agent has the ability to progress to become a real estate broker who can own their own brokerage and have other agents work under them.
III. Restaurant Owner
Becoming a Restaurant Owner takes a long amount of schooling, but typically, most owners of restaurants either have a Bachelor’s or Associate’s Degree in Business, Accounting, Management, Culinary Arts, or some other major. In general, in the United States, restaurant owners have a starting salary of $88,346 but this average can vary drastically (as businesses can either succeed or fail). As for chances for advancement, restaurant owners typically can expand their business, not necessarily go through more schooling.
Chosen Career? General Dentistry
Ever since the start of my 8th-grade year in middle school, the field of Dentistry has been of high interest to me. Out of the three choices, this profession is by far the most demanding in terms of schooling requirements but offers many possibilities in terms of what I can do with my degree and it also has multiple ways I can further progress. If I do become a general dentist, I can decide to go back to school to specialize in a particular field like Orthodontics or Pediatric Dentistry which can increase my overall earnings potential in comparison to being a general dentist. In addition, this job profession is incredibly rewarding with the starting salary and Dentists are in demand in multiple areas of the United States.
Along with this, I am someone who loves to help others, and being in the healthcare industry is something very important to me personally. Even though tuition is very expensive for Dental school, and there is a high likelihood of me taking out many school-related loans, it is still a profession I want to go into. According to my career plan, I want to apply for the Navy HSCP scholarship which will allow me to defer many of my loans during Dental school and will enable me to serve in the navy, as I want to (about 4 years in a contract term). This gives me the opportunity to serve in humanitarian missions around the world and gain a lot of experience as a Dentist.
Unit 1: Economics Assignment
Option 1: Students will write a 2-4 page paper to demonstrate an understanding of economics and its fundamental principles, explaining the difference between traditional, command, and market economies. In addition, the essay must discuss the major characteristics of the American free enterprise economy and the major types of economic organizations in the United States.
By looking at the very complex topic of Economics, most recognize the multiplicity of theories that revolve around the idea of the exchange of goods and services among others within a certain region or area. Going further into the makeup of an economy of an area, there are multiple factors that affect its success. The four major things that affect the successfulness of an economy are Supply and Demand, Economic Incentives, Scarcity, and Costs and Benefits.
Beginning with the concept of Supply and Demand in an Economy, this is what a market system is driven by. There are three different types of market systems which include: a traditional economy, a market economy, a command economy, or a mix of those three. All of the different types of market systems vary in terms of advantages and disadvantages but in regards to the market system that the United States utilizes; we use a mixed economy that combines both aspects of a command economy and a market economy. Supply and Demand come into play when goods are concerned and can affect the price of items. An example of the concept of Supply and Demand in a real-world setting is a high demand for a certain product like Semiconductor chips that are used in smartphones, automobiles, computers, and tablets but due to a shortage of that item or a low supply, its price can go very high.
Regards to Economic Incentives and the role they play in an Economy, it is strongly tied to the concept of supply and demand. When the demand for a good is high, the market value for that item increases which gives producers of that particular item a higher incentive to produce more of it because of its higher value and higher earnings potential. There is a similar outcome when there is a shortage or scarcity of a good which can affect other producers and cause them to drive their costs up in regard to the consumers. In theory, the only way for prices to go down is if there is a surplus or a supply of a good that overcomes the demand for it. An example of this concept is visible in Chain grocery stores where if there is a surplus of an item that isn’t selling; it causes them to drive the price downward in order to give the consumer an incentive to purchase it.
With respect to another factor in an economy; Costs and Benefits are two things that affect the success of an economy. This economic concept is in close relation to Economic Incentives where people essentially try to maximize the benefits they have in comparison to the costs that come along with making a decision. A great example of this concept that applies to both the consumer and business sides of the economy would be if there was a high demand for a specific flavor of chocolate bar. Businesses are incentivized to produce more of it only if the benefits outweigh the costs associated with hiring more employees, better machinery, etc. Consumers, make a similar decision where they may see the popular flavor of chocolate but only choose to purchase the best-tasting brand if it fitted with their expectations (in terms of price) but if it did not, they would purchase the lesser quality brand.
In connection with all of these concepts that make up an Economy, there is the last important part which is Scarcity. In a sense, most people have a knowledge of scarcity whether it be in relation to products that they favor or resources that they use in their everyday lives like water. Despite those who may be unaware of scarcity, it affects everyone in different economies around the world because Earth has a limited amount of resources which tends to affect the economies vary dramatically, especially in recent years. This reality has forced individuals and businesses to make decisions that are closely related to the allocation of resources and how to properly utilize them for current or future use.
Now that I have explained the 4 concepts that affect economies, I would like to focus on the makeup of the United States economy, which is referred to as one of the least regulated markets in the world. As I mentioned in my explanation of the concept of Supply and Demand, the United States operates as both a market economy and a command economy. So what is a market and command economy? According to Oxford Languages, the term “market economy” is: “an economic system in which production and prices are determined by unrestricted competition between privately owned businesses.” and a “command economy” is “an economy in which production, investment, prices, and incomes are determined centrally by a government.”. The United States is able to have a mix of these two economic systems by integrating free-market principles when it comes to business services and consumer goods. But in regards when the United States is in defense or protection of its economy, it does contain government regulation which is a major part of the command economy concept.
The command, market, and traditional economies differ in several ways. Starting with a traditional economy, this usually refers to economies that are in development where it is based on traditions and beliefs that help to shape the way goods and services are offered.
All economies that are free market, command, or mixed all evolved from a traditional economy. In free-market economies, supply and demand determine the production of services and goods whereas a command economy’s economic decisions are not determined by supply and demand but by the government instead.
In the United States, there are several economic institutions that all have to do with the regulation of certain things in the economy in order to keep it somewhat healthy. One example of an economic institution is the United States Department of Agriculture which is mainly responsible for establishing laws that regulate the Agricultural industry in regard to general farming, food, and forestry. Other federal institutions in relation to the economy are the US Internal Revenue System, the United States Department of Commerce, the Bureau of Economic and Business Affairs, and others.
In conclusion, there are 3 different economic systems in the world that all differ in their success and 4 concepts that affect those economies.
Sources:
1. https://gocardless.com/en-us/guides/posts/what-type-of-economy-does-the-u-s-hav e/#:~:text=Created%20by%20the%20United%20States,operates%20as%20a%20fr ee%20market.
2. https://languages.oup.com/google-dictionary-en/
3. https://www.investopedia.com/articles/economics/11/five-economic-concepts-need -to-know.asp